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The end of an era for Laker Airways


During the winter of 1981–82 Sir Freddie Laker, pioneer of the cheap ‘no-frills’ charter airline, attempted to diversify into the full-fare market by introducing a ‘regency class’ premium cabin on Skytrain services. Although that season proved very costly to the airline, with many flights carrying very low passenger loads, advance bookings for the coming summer season were encouraging.

The crisis came to a head on 4 February 1982, while Sir Freddie Laker was in New York filming a new Skytrain commercial. His bankers called in their loans, giving him until 5 p.m. that day to repay £5 million. He managed to get the deadline extended until 8 a.m. the following day, but was still unable to raise the funds and the banks appointed a receiver for Laker Airways. The airline collapsed early on the morning of 5 February 1982 with debts totalling £270 million.

Aircraft already in flight on services were recalled to Gatwick or Manchester, and thousands of passengers were stranded. During the following years Sir Freddie filed lawsuits under the US anti-trust laws against many national airlines, including British Airways, Pan American Airways, SABENA, Lufthansa and SAS, alleging conspiracy.

At that time, British Airways was in the run-up to privatisation. This would not have been able to proceed until the case was settled, and an adverse court decision would have had damaging effects on the company’s flotation on the stock exchange. The damages awarded might also have bankrupted some of the other airlines cited, so, on 14 January 1985, the airlines being sued jointly offered Sir Freddie $50 million to end his court action. One week later he entered into a private settlement with British Airways. In July 1985 British Airways contributed almost $35 million to an out-of-court settlement fund to compensate Laker’s creditors. The other transatlantic carriers involved also agreed out-of-court compensation payments and Laker’s outstanding debts of $69 million were cleared.

Extracted from Flying to the Sun by Charles Woodley

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